Cloud computing success stories come in all shapes and sizes – private, public, large F100 companies, SMBs, and the list goes on. From these use cases, the assumption that the cloud enables greater agility is hard to question. But while it might be tempting to presume that delivering services will be more cost effective via the cloud, it's rarely that simple.
Apptio recently teamed up with the Worldwide Executive Council (WEC) to interview 100 CIOs on how they, and other IT decision-makers, are evaluating and implementing cloud technologies. And, of course, we were particularly interested in hearing about the specific financial metrics they used to justify the investment in cloud services.
According to the survey, 40% admitted to not currently tracking utilization levels of virtualized and cloud infrastructure. Similarly, nearly half of the respondents acknowledged reporting the cost of cloud services as a lump sum of all IT costs rather than breaking it out. Sounds like a problem of apathy. But, the truth is that most IT leaders don’t have the necessary metrics in place to build an intelligent business case for moving to the cloud or worse – no way to quantify the investment.
Other key findings include:
To make an educated decision about moving to the cloud, companies must first understand what it costs to deliver those IT services internally. Next, IT leaders must calculate the fully loaded cost of the cloud service. During this process, many people will be surprised to find that the list price of a cloud service is not always what it costs. To determine a true fully loaded cost, IT leaders must evaluate several criteria including the cloud’s pricing model (monthly subscription, by CPU hours, or even the often-tricky pay-as-you-go option), extra staffing requirements, hardware and software maintenance, use of firewalls and other security controls, and environmental requirements such as cooling and heating. Only by evaluating each of these categories can IT leaders paint a clear picture of what it costs to deliver a service internally vs. the cloud.
Based on the survey and our interaction with Fortune 1000 companies, it’s clear that IT leaders require Technology Business Management solutions to calculate, analyze and compare the cost/benefit of supporting IT services in-house vs. the cloud. TBM is critical to taking the mystery out of cloud decisions where hidden costs and ambiguity can lead to bad decision-making.
Just like a cloud in the sky, the cost/benefit of this rapidly evolving technology is not always so clear; or so the survey says.